Medium well

8 October 2008 By Robert Cyran Follow @rob_cyran

The comprehensiveness of the UK bank bailout plan makes US efforts look rather ad hoc. Unlike the US, it contains a guarantee for mediumterm debt issuance by banks. That, in conjunction with capital injections, should go a long way toward breaking the interbank lending logjam.

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As part of the UK's plan to provide financial support to the banking industry, the government will guarantee mediumterm debt issuance. The guarantee will only be available to banks that raise what the government considers appropriate levels of tierone capital. Participating institutions are expected to issue senior unsecured debt of up to 36 months in sterling, dollars or euros. The government estimates the guarantee will be on the order of £250bn.

The following institutions immediately qualify: Abby; Barclay's; HBOS; HSBC; Lloyds; Nationwide; and Royal Bank of Scotland.

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